I have been doing more digging on this name last few weeks. I agree with Bear77 about currently not having a competitive advantage and the huge amount of competition involved in this space. The question is, are ELMO building a competitive advantage?
Here is a link to download Navigo Australia HR Tech Survey 2019. What I found very interesting was the number of areas Elmo was in 1st place or top 3 by my count was like 7/13 areas. Now granted this is a survey of about 130 of Navigo clients (corporations). I beleive that Elmo has been moving up the ranks over the years.
If you go right to the bottom of the PDF it will also show you a Vendor List. This looks to be 60-90+ tech companies operating in this space. What it shows is just how fragmented this market is.
The "acquisition of revenue" model puts me off ELMO. It reminds me what WTC are doing buying up a very fragmented market. Share price has increased massively but jury still out on how it all comes together.
I think you will see a continued run in ELMO's share price (like we are seeing now). But for ELMO to show they are building a competitive advantage, I'd want to see the average number of modules being used by clients increase from 2.6. I listened to this ASX Connect Aug 2019 Video where Lessem (CEO) said that new customers were signing up to an average of~5.6 modules. This is very interesting and not something I had herd/read before in other presentations. With a high number of modules being used by each client this leads to ELMO being very integrated & critical to the organisation and would lead to high switching costs. They essentially will lock in those clients for a long time.
What also makes me more inclined to be bullish on this is that the HR/HCM cloud industry is a growing market (from being paper/hard software). So although ELMO might not build a sustainable competitive advantage it can still grow revenues and grow market share as the industry is not tapped out yet.
I am not buying here. But over the next few months if it pulls back it could give a good opportunity for a 2-3 year play.
Benz
I'm in the US and am wondering if this is the same company that trades on the US stock exchange as ELMFF. I'm confused because the price is different--4.42 per share in the US v 6.40 on the Australian exchange.